Finders, Keepers?

Niko Jaakkola, Daniel Spiro and Arthur A. van Benthem

No 22421, NBER Working Papers from National Bureau of Economic Research, Inc

Abstract: Natural-resource taxation and investment exhibit cycles in a vast number of countries, driving political turmoil and power shifts. Using a rational-expectations model, we show cycles result from governments' inability to commit to future taxes and firms' inability to credibly exit a country indefinitely. A government sets a low initial tax inducing high investments, which in turn prompts it to increase taxes next period. This induces low investment thus low future taxes, and so on. We investigate which factors reinforce cycles and present ways of avoiding them, and document cycles across many countries including detailed case studies of two Latin-American countries.

JEL-codes: H25 Q35 Q38 (search for similar items in EconPapers)
Date: 2016-07
New Economics Papers: this item is included in nep-pol
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Published as Niko Jaakkola & Daniel Spiro & Arthur A. van Benthem, 2019. "Finders, keepers?," Journal of Public Economics, vol 169, pages 17-33.

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Related works:
Journal Article: Finders, keepers? (2019)
Working Paper: Finders, Keepers? (2017)
Working Paper: Finders, Keepers? (2016)
Working Paper: Finders, Keepers? (2016)
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